January sales of new Class 8 trucks on the U.S. market dropped by 39.4% from December sales, according to data received from ACT Research. The difference, however, isn’t as stark it might appear. According to Kenny Vieth, president and senior analyst at ACT, it’s all about “seasonal adjustment” of the numbers.
“In December, we typically sell 26% more trucks than in the average month. And in January, we typically sell 21% fewer trucks than in the average a month,” he said. “So when we seasonally adjust, we see that the decline was right about what we expected.”
According to ACT’s latest report, 15,208 new, Class 8 trucks were sold on the U.S. market in January, down 9,908 from the 25,116 sold in December. Compared with January 2021, when 17,163 trucks were sold, deliveries declined by 11.4%. The reason for the drop, according to Vieth, is the same as it has been for months — supply constraints due to shortages of semiconductors and other build components and materials.
A Feb. 10 “explainer” story released by the Associated Press explored the semiconductor shortage and its causes, noting that trouble was brewing even before the pandemic caused shutdowns and restrictions. In other stories the pandemic is certainly mentioned, along with the unexpected rise in sales of personal computers as companies equipped employees to work from home.
The increase in the building of electric cars, however, coupled with the implementation of 5G cellular networks, called for a new type of chip, one that factories needed retooling to produce. The irony is that we can complain on our new 5G phone about delays and higher prices for vehicles that manufacturers can’t get enough semiconductors to build.
Relief is coming, but it takes time to bring new factories online. There’s a potential problem, too. Because the majority of chips used by auto and truck manufactures are made in Taiwan, there’s a threat that China could act on its promise to claim the island, further reducing worldwide supplies. Still, investment in new manufacturing facilities is planned for the U.S. by several manufacturers.
Of the trucks sold in January, 11,599 were Class 8, fifth-wheel-equipped tractors, while 3,609 were vocational trucks equipped with dump, trash, concrete or other specialized bodies.
“I think a lot of that has to do with inventories,” Vieth said, adding that vocational inventories were down 17% year over year in January. With reduced build rates, OEMs can’t build fast enough to replenish inventories at dealers.
The backlog of Class 8 trucks ordered for the North American market stood at 258,900 at the end of January. That’s an improvement from the October peak of 284,400, but still comes in at just under 10 months to build them all — and that’s without any further orders.
“Builders are telling us that in February and March build rates are going to drop,” Vieth said. “That will push the backlog back up to about 11 months.”
The used truck market isn’t likely to help, as inventories are also depleted in that market. Preliminary numbers provided by ACT showed that same-dealer sales fell 8% in January over December. More telling is the 32% decline in sales compared to January of 2021.
When used trucks are available, prices are high. According to the ACT publication, “State of the Industry: U.S. Classes 3-8 Used Trucks,” average unit prices this January were a whopping 82% higher than in January 2021 — and that price was for trucks averaging 6% older and with 6% more miles than the previous year.
“The used truck market is operating with less inventory than it has at almost any time in recent memory and perhaps ever,” said Steve Tam, vice president of ACT. “The combination of through-the-roof demand and severely limited inventory has driven prices to never-before-seen levels.”
As far as forecasting sales for the rest of 2022, it looks like more of the same, at least for a while.
“Whether you’re looking at freight rates or profitability, or at least the revenue side, it’s all good,” Tam said. “The bad news is that everything’s costing you more. Barring an unforeseen event, the economy should grow slowly through the year.
Results were mixed for individual OEMs, but all of them saw sales declines from December, according to data received from Ward’s Intelligence. That’s the usual case for January, which tends to be a weak month for sales.
Freightliner sold 1,801 fewer trucks in January than in December for a decline of 21.7% from December’s 8,315. Compared to January 2021, sales declined by 771 (10.6%). Freightliner sold 37.7% of the new Class 8 trucks sold on the U.S. market in 2021.
Volvo and Volvo-owned Mack saw the largest sales declines by percentage. Volvo’s 1,404 sold in January was down 61.6% from December’s 3,657 and 19.6% down from January 2020. Mack sold 683 trucks in January, down 76.7% from 2,926 in December and down 36.9% from January 2020, when 1,082 were sold. In 2021, Volvo owned 10.0% of the new Class 8 U.S. market, while Mack took 8.4%
International sold 1,950 in January, down 8.5% from December sales of 2,131 but 15.3% better than January 2021 sales of 1,082 units. International ended 2021 with 11.9% of U.S. new Class 8 sales.
Kenworth sales of 2,218 in January represented a 39.7% drop from December’s 3,680 but were 18.7% better than January 2021 sales of 1,868. Peterbilt didn’t fare quite as well, with January sales of 1,623 falling 52.3% from December’s 3,405 and 41% from January 2021, when 2,753 Petes were sold. Overall, during 2021, Peterbilt edged out Kenworth for market share with 14.8% of new Class 8 sales versus 14.6% for Kenworth.
Western Star sales of 565 in January was a decline of 6.1% from 602 sold in December but was 35.2% better than the 418 sold in January 2021. The company took a 2.7% share of the market in 2021.
Just like most of last year, both new and used trucks will be harder to find and more expensive to buy. Those that find them, however, should find plenty of freight to haul and at very good rates.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
